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PLAYING TODAY’S STOCK MARKET TIP #1: PLAY THE LONG-SIDE ONLY!

October 22nd, 2011

Play The Long-Side Only: Leave the short-selling side of the stock market game for experienced traders to play. The mental discipline required to win consistently at short-selling is difficult for most investors to acquire and maintain.

Remember the words of legendary investment sage, Bernard Baruch (1870-1965), who once remarked, “Bears don’t live on Park Avenue.” While we all know that the market goes down for part of the time, it’s important to understand that playing the long side and participating in the upward movement of stocks has proven to be the more likely path to long-term investment success. If your objective is to make big money consistently over time, then stick with playing the long side of the market — betting on a gradual upward movement in stocks, rather than by playing the short side hoping for a quick collapse in prices. That’s because the stock market has an obvious bullish bias by spending significantly more time moving up than it does going down. (Note: The “long side of the market” or “going long” means to bet that a particular stock is going to go up in price. This is the traditional wager that stock market investors make.)

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“There is a way to make a lot money in the market; unfortunately it is the same way to lose a lot of money in the market.”

Peter Passell and Leonard Rose

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